Ahead of Q4 earnings, Cantor Fitzgerald reiterates Halogen Software Buy

Cornerstone OnDemand CEO Adam Miller. The U.S.-based provider of talent management software says its sees opportunity in the lower-mid portion of the market, which Cantor Fitzgerald analyst Blair Abernethy regards as a positive for competitor Halogen Software. Top notch recent results from Halogen Software’s (TSX:HGN) peers demonstrates the larger growth of the talent management space, says Cantor Fitzgerald Canada analyst Blair Abernethy.

On Thursday, after market close, Halogen will report its Q4 and fiscal 2013 results. The Ottawa-based company is following on a Q3 in which it lost $718,000 on revenue of $12.3 million, a topline that was up 27% over Q3, 2012.

Abernethy notes that Halogen competitors Cornerstone OnDemand (NASDAQ:CSOD) and The Ultimate Software Group (NASDAQ:ULTI) both recently reported Q4 results that revealed strong double-digit topline gains. Cornerstone’s revenue of $54.9-million was up 51% year-over-year, Ultimate’s was up 24%.

The Cantor analyst notes that Cornerstone management says it is seeing opportunity in the lower mid-market, in part because there is less competition. This is “clearly a positive” for Halogen, he says.

A recent report from Research and Markets said globally, the Talent Management Software market will grow at a Compound Annual Growth Rate of 17.59% between 2013 and 2018.

Abernethy expects Halogen will earn $0.70 a share on revenue of $47.7-million in fiscal 2013, implying a fourth quarter topline of 12.3-million and bottom line of a loss of $0.12.

In a research update to clients this morning, Abernethy maintained his BUY recommendation and $19.00 one-year target on Halogen Software. Shares of the company closed today up 1.1% to $14.08.

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